United States Attorney Jenny A. Durkan
Western District of Washington
Marysville Tax Preparer Sentenced To Six Months In Prison For Falsifying Tax Returns To Increase Tax Refunds
Navy Veteran Prepared more than 200 Falsified Tax Returns for Service Members
FREDRICK SETON, 49, of Marysville, Washington, was sentenced today in U.S. District Court in Seattle to six months in prison, one year of supervised release and $159,710 in restitution for Willfully Aiding and Assisting in the Preparation of Materially False Tax Returns. SETON pleaded guilty in June 2011, admitting that over three years between 2005 and 2007 he prepared and submitted 205 false tax returns for military service members, claiming false business deductions to reduce their taxable income. SETON operated a home-based tax preparation business that became popular with members to the military, primarily Navy enlistees. U.S. District Judge John C. Coughenour imposed the sentence saying he was giving SETON some credit for his 20 years of Navy service prior to committing this crime.
According to records in the case, SETON charged between $50 and $100 dollars for each tax return he completed. He relied on “word-of-mouth” referrals for his tax preparation service. During “tax season,” lines of cars carrying military personnel would line up at SETON’s house to have their returns prepared. Many of SETON’s clients told IRS examiners that they heard SETON could provide them with the best return. When an undercover IRS agent went in to the business for tax preparation help, SETON told him not to report $23,000 earned in cash from a business. SETON then offered to create business expenses to “zero out” other earned income reported on a form 1099. SETON added vehicle, utility and other undocumented business expenses to offset the undercover agent’s income, so that he would receive a bigger refund.
In asking for a prison sentence, prosecutors noted that as a veteran, SETON’s benefits are supported by those who honestly pay their taxes, and his activities will actually harm the service men and women he was claiming to assist. “The defendant prepared at least 205 false tax returns involving over 100 unique tax-payers. Though each taxpayer initially benefitted financially from the defendant’s actions, these taxpayers are now victims of Mr. Seton’s crime. Their returns will now be audited by the IRS, some five to seven years after the returns were submitted, and the IRS will attempt to recover the tax-payers’ undue refunds, resulting in turmoil and instability in their financial lives at a time when most cannot afford it,” prosecutors wrote in their sentencing memo.
The case was investigated by Internal Revenue Service Criminal Investigation (IRS-CI).
The case was prosecuted by Assistant United States Attorney Matthew Diggs.